Abstract:

This paper develops a growth accounting framework for the domestic-international double cycle using growth decomposition from a cyclical perspective and a general equilibrium model with a production network structure in which the Total Factor Productivity (TFP) of the domestic economic cycle is jointly determined by the input-output multiplier and technological growth rate. According to empirical measurements and factor structure decomposition using the WIOD historical database and the OECD database, the study finds that: (1) the average input-output multiplier of the domestic economic cycle from 1965-2018 was 2.1, reaching a high level. (2) the domestic economy is transitioning towards a service-oriented structure in the new era, but the service sector does not fully compensate for the efficiency loss of the manufacturing industry, resulting in a 10.56% decline in the input-output multiplier between 2015-2018 and a 0.33% loss in economic growth. (3) On a structural level, the decline in the input-output multiplier of the domestic economic cycle between 2012-2018 was mainly due to changes in the production network structure, the later explaining 66% of it. (4) drawing from the experiences of the United States, Germany, and Japan in transitioning from industrialization to structural servitization improving the efficiency compensation of the service industry is the key to the success of transformation.

Key words:

Production network structure, general equilibrium, input-output multiplier, economic growth